Indian The stock market has fallen by more than 10 percent from its all-time high. Due to this, retail investors have suffered a loss of lakhs of crores of rupees. This fall in the market has scared a large number of retail investors and they no longer want to continue their investments. Key index Nifty has fallen more than 10 percent from its record high of 26,277. While the Sensex has slipped more than 8,500 points from its high. However, it is not yet a bear market. When the market falls 20 percent from its high, it is considered a bear market. But the suffering of retail investors is still huge.
There are many confusions in the minds of investors
Some retail investors believe that it is better to wait until the market comes to its correct valuation, rather than continuing to invest. At this time investors have many questions in their minds. Like- should they wait till the market comes to its correct valuation? Why invest when the market is continuously falling? More downside is likely to come, so why not wait some more time? There may be some truth in these things, but only for lump sum investors and not for SIP investors. Let us explain how.
Should SIP be stopped?
When investors buy mutual fund units during a falling market, the average price of their mutual fund units goes down, increasing their chances of making more profits during a bullish market. Additionally, when you buy units across all market cycles, the total cost is averaged. That means you don’t need to wait for the ‘right’ price to invest in mutual funds. The essence is to keep buying at regular intervals.
Falling market is good for buying
Apart from this, buying is considered good when the market is falling. Instead of stopping SIPs, investors should take advantage of the market decline and use it as an opportunity to buy more. SIP contributions reached an all-time high of ₹25,322.74 crore in October 2024. Whereas in September it was ₹24,508.73 crore. A year ago, SIP contributions in October 2023 stood at ₹16,928 crore, thus indicating a growth of 49.6 per cent in one year between October 2023 and October 2024. The number of SIP accounts reached an all-time high of 10,12,34,212 in October 2024. Whereas in September 2024 it was 9,87,44,171.
